Correlation Between Federated Emerging and Federated
Can any of the company-specific risk be diversified away by investing in both Federated Emerging and Federated at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Federated Emerging and Federated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Emerging Market and Federated U S, you can compare the effects of market volatilities on Federated Emerging and Federated and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Federated Emerging with a short position of Federated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Emerging and Federated.
Diversification Opportunities for Federated Emerging and Federated
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Federated is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Federated Emerging Market and Federated U S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated U S and Federated Emerging is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Federated Emerging Market are associated (or correlated) with Federated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated U S has no effect on the direction of Federated Emerging i.e., Federated Emerging and Federated go up and down completely randomly.
Pair Corralation between Federated Emerging and Federated
Assuming the 90 days horizon Federated Emerging Market is expected to generate 1.59 times more return on investment than Federated. However, Federated Emerging is 1.59 times more volatile than Federated U S. It trades about 0.12 of its potential returns per unit of risk. Federated U S is currently generating about 0.03 per unit of risk. If you would invest 786.00 in Federated Emerging Market on September 4, 2024 and sell it today you would earn a total of 6.00 from holding Federated Emerging Market or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Emerging Market vs. Federated U S
Performance |
| Timeline |
| Federated Emerging Market |
| Federated U S |
Federated Emerging and Federated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Emerging and Federated
The main advantage of trading using opposite Federated Emerging and Federated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Emerging position performs unexpectedly, Federated can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Federated will offset losses from the drop in Federated's long position.| Federated Emerging vs. Shelton Emerging Markets | Federated Emerging vs. Mondrian Emerging Markets | Federated Emerging vs. Dodge Cox Emerging | Federated Emerging vs. Templeton Emerging Markets |
| Federated vs. John Hancock Money | Federated vs. Wt Mutual Fund | Federated vs. Schwab Treasury Money | Federated vs. Janus Investment |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |